Blog: November 2013

In startup lingo, it’s called the “Valley of Death,” the time after a startup has left the academic bubble and before it has reached commercialization. As the name makes clear, it’s a difficult time to find funding. For investors, says YEI Deputy Director Erika Smith, it’s all about risk. “At every stage, investing is about trying to reduce risk,” Smith told an audience gathered at YEI’s incubator on Nov. 22 for an early stage funding talk. “What are they willing to take on in terms of uncertainty?”

Panelists Kyp Sirinakis, managing partner at Rock Spring Ventures, and Adrian Horotan, principal of Elm Street Ventures, discussed how they make decisions about who to fund and offered advice on how to approach funders and hold their interest.

“We’re investing in people,” Sirinakis said. Rock Spring primarily works with technologies emerging from universities that have typically already received seed funding. For her to take a potential investee seriously she says they must come armed with a business plan and deck. “We know the business plan will change,” she said, “but it shows that you’ve thought through the steps and have discipline.”

Approximately half of the companies Elm Street funds come from Yale, and they are very active in the seed stage. He stressed the importance of face-to-face meetings. “The best way to get a meeting is to get introduced,” Horotan said, adding that phone is a distant second and email is a very distant third.

Sirinakis concurred, adding that Rock Spring receives 1,000 business summaries a year. “The ones that make it to the top have a trusted advisor or know someone in our network,” she said.

Once a meeting has been secured, the panelists advised dressing professionally (and in keeping with the company culture); telling a story; having other investors at the table; and grabbing the investor’s curiosity early on. For a crash course in pitching, Horotan recommended watching David Rose’s talk “Ten Things to Know Before You Pitch a VC.”

In the lead up to the 2014 YEI Summer Fellowship (applications go live Dec. 2 and are due Jan. 22) YEI presents a look at some of our success stories – founders who developed their startups during past YEI Summer Fellowships and have gone on to reach new heights in their respective industries.

Justin Borgman (still pursuing his SOM degree) is the CEO and cofounder of Hadapt —a tech company working on better ways to rapidly analyze huge chunks of data such as big databases or image and video files. The technology allows businesses to better process big data, such as web traffic, in order to better understand consumer behavior and preferences.

Highlights:

Justin started Hadapt as a Yale SOM student along with Yale computer science professor Daniel Abadi as part of the Technology Commercialization Program run by YEI and the Yale Office of Cooperative Research.

He's a Commonwealth Scholar at the University of MA at Amherst where he received a B.S. in Computer Science.

Hadapt was a finalist in the “Startup to Watch” category during the Massachusetts Technology Leadership Council’s 2013 awards.

Justin was awarded one of the Boston Business Journal's "40 Under 40" awards in Oct. 2013 as part of the next wave of talent in the Boston community.

Hadapt was named one of 14 big data startups to watch by Business Insider and one of the "hottest startups" by the New England Venture Capital Association.

The startup received $9.5 funding through investments in 2011 and is based in Cambridge, MA.

Hadapt went on to raise $17 million in total from the Cambridge offices of Bessemer Venture Partners and Atlas Venture and Norwest Venture Partners of Palo Alto.

Jim Boyle, managing director of the Yale Entrepreneurial Institute, had high praise for the students attending the Entrepreneurship at FES! panel discussion at Bowers Auditorium on November 18. "Pound for pound, Forestry is one of the most dangerous schools at Yale," Boyle said, citing both the school's size and its penchant for producing deep thinkers.

Several YEI startup success stories have come from the Yale School of Forestry and Environmental Studies, including SilviaTerra, cofounded by Max Uhlenhuth (YC ’12) and Zack Parisa (FES ’09), which unveiled a proprietary software that uses satellite images with limited ground monitoring for cost-efficient and accurate forest management from afar. The company has now worked with hundreds of foresters and has reached about $3 million in sales.

YEI Program Director Alena Gribskov moderated the panel, detailing the range of opportunities available at YEI and Yale for ventures at every stage. These include YEI's Start Something workshop for exploring entrepreneurship and the lean startup method; the Venture Creation Program (VCP) for beginning the early work of building out a venture idea; and the Summer Fellowship, YEI's 10-week business bootcamp designed to give students time to fully develop and execute their startup.The VCP provides up to $2,500 in support along with mentorship and business guidance; the Summer Fellowship provides $15,000 per team along with mentors, expert speakers, access to a community of entrepreneurs, trips, meals and more. The Sabin Sustainable Venture Prize provides $25,000 in support for innovative student ventures in the green space.

Panelists Elgin Tucker, a 2013 YEI Summer Fellow and cofounder of BlackStartup; Mark Woloszyn, cofounder of Aniya Agroforestry; and Jeff Woodward, who is working on transparency in the natural food space, had all been through the process with their own startups in various stages of development. All talked about the challenge of finding time to work on their ventures, to coordinate with far-flung team members and to get the work done - like regular customer interviews - that would allow them to tighten their business plans and make adjustments.

"That process of learning and iterating is really important to keep in mind," Gribskov said.

The panelists also noted that they wished they'd learned the lean startup method earlier and talked about the invaluable connections they made at Yale through YEI programs. Tucker said: "YEI provided access to mentors - from legal, to management to fundraising. There was access to senior executives from McKinsey to Disney."

The panelists also described their commitment to working in the social/environmental sphere. "It's a strength to work on somthing social or environmental," Woodward said. "You need to really care about it. That passion will make you successful."

The Yale Elevator Pitch Competition was held last night, Wed., Nov. 6 at YEI's Whitney incubator and brought out a range of innovative ideas from students who stood and presented before judge Barry Nalebuff, cofounder of Honest Tea and Milton Steinbach Proffesor of Management at Yale.The event was organized by the Yale Entrepreneurial Society.

The victors were:

Sean Haufler (YC '14): 1st place ($300) for CarGenius, a used car website that aggregates listings from other websites.

Bill Schnoor (BA ’80, Law ’83), the newest member of the Yale Entrepreneurial Institute’s Advisory Council has been supporting YEI since it began. In fact, years before YEI was formed by the Yale Office of Cooperative Research, Schnoor was waiting for tech entrepreneurship to gain momentum at the university. In his legal work with startups he’d long noticed the power of harnessing university-based research and talent to practical commercial opportunity at schools like Stanford and MIT, and wanted to encourage a similar approach at Yale.

He currently serves as co-chair of the Technology Companies Group and the Clean Technologies Practice at Goodwin Procter in Boston. Schnoor recognized that supporting student entrepreneurs was important beyond the immediate image boost and financial gain: It would give those enterprising students an enduring connection back to Yale.

Seeing YEI take off and grow into a recognized force for launching successful startups has been gratifying, Schnoor says, who adds: “I’m seeing the ecosystem build momentum and the trajectory is great.”

He mentions YEI’s Tech Bootcamp—a 10-week programming camp for Yale students run in partnership with the Yale ITS Student Technology Collaborative—and increased academic-year programming, including the ongoing Venture Creation Program for nascent startup ideas—as particular bright spots. In his role on the Board, Schnoor will encourage YEI to continue to develop and push out more ingenious Yale companies, regardless of where they choose to take root. Success, he says, is in the numbers.

“If Yale embraces the MIT-Stanford view, ‘We want all students and faculty to feel empowered to launch companies,’” over time more will stay in New Haven in absolute terms, even if many or most ventures choose to relocate elsewhere,” Schnoor says. “You have to approach it with an attitude of abundance – let 1,000 flowers – or startups - bloom.”